TORONTO, May 11 (Reuters) - The Canadian dollar rose
against the U.S. currency on Wednesday morning after
better-than-expected Canadian trade data and on talk of
positive flows on the back of foreign acquisitions of Canadian
companies.

Canada's trade surplus climbed to C$627 million in March
after two months of decline as broad gains in exports
outstripped higher imports. [ID:nN11150409]

A Reuters survey of analysts had predicted a C$500 million
surplus.

By contrast, the U.S. trade deficit rose more than expected
in March as exports leaped to a record high but imports rose
nearly 5 percent as oil prices jumped. [ID:nCAT005430]

The Canadian currency was already on firmer ground heading
into the trade reports, hitting a one-week high after breaking
through a technical level.

"The Canadian trade data really provided minor support for
the Canadian dollar," said Darren Richardson, senior corporate
dealer at CanadianForex.

"The market is really focusing right now on some possible
mergers and acquisitions to the positive for the Canadian
dollar."

At 9:29 a.m. (1329 GMT), the Canadian dollar CAD=D4 was
at C$0.9549 to the U.S. dollar, or $1.0472, up from Tuesday's
North American session close of C$0.9577 to the U.S. dollar, or
$1.0442. Earlier, it hit a high of C$0.9513 against the U.S.
dollar, or $1.0512, its strongest level since May 4.

The currency climbed against the greenback overnight,
pushing past the C$0.9570 area despite soft oil prices, which
fell as Chinese inflation data signaled the world's second
largest economy might be cooling. [O/R]

The price of U.S. oil is often a key driver for the
Canadian dollar because of Canada's status as an oil exporter.

David Bradley, director of foreign exchange trading at
Scotia Capital, also made note of the speculation in the market
that there would be merger-and-acquisition related trades. He
also pointed to interest from Asian central banks in the
overnight session in buying commodity-linked currencies such as
the Australian and Canadian dollars .

Longer-term, the Canadian dollar is still underpinned by
strong fundamentals, he said.

Late on Tuesday, Finance Minister Jim Flaherty said
Canada's strong currency reflects confidence in its economy,
though sharp moves in its value are not welcome. He said he
didn't want to see further U.S. dollar weakness and thought
strong Canadian and U.S. currencies were both positive for the
world. [ID:nN10140882]

Canadian bond prices were lower but off early lows.

The two-year Canadian government bond CA2YT=RR was off 1
Canadian cent to yield 1.731 percent, while the 10-year bond
CA10YT=RR was down 3 Canadian cents to yield 3.270 percent.